There were 2,232 households of which 18.3% had children under the age of 18 living with them, 36.9% were married couples living together, 8.8% had a female householder with no husband present, and 51.6% were non-families. 41.0% of all households were made up of individuals and 17.7% had someone living alone who was 65 years of age or older. The average household size was 2.06 and the average family size was 2.76.

In the city, the population was spread out with 11.0% under the age of 18, 41.4% from 18 to 24, 14.5% from 25 to 44, 16.7% from 45 to 64, and 16.4% who were 65 years of age or older. The median age was 23 years. For every 100 females there were 123.2 males. For every 100 females age 18 and over, there were 127.2 males.

The median income for a household in the city was $28,982, and the median income for a family was $58,529. Males had a median income of $35,288 versus $26,094 for females. The per capita income was $16,497. About 8.4% of families and 21.6% of the population were below the poverty line, including 12.9% of those under age 18 and 12.0% of those age 65 or over.

Lexington also contains a host of small retail businesses, bed and breakfast inns, and restaurants catering to a unique mixture of local, tourist, and collegiate clientele. The historic R. E. Lee Hotel, built in the 1920s, underwent extensive renovation and re-opened its doors late 2014.

The city has a number of independent newspapers. The News-Gazette is a weekly community paper; it also produces a free shopper known as The Weekender. The Rockbridge Weekly was noted for printing police and other local crime reports. It was bought by The News-Gazette in June 2012 and shut down. The Rockbridge Advocate is a monthly news magazine with the motto "Independent as a hog on ice".

Flag controversy

In 2011, the city erupted in controversy after the City Council passed an ordinance to ban the flying of flags other than the United States flag, the Virginia Flag, and an as-yet-undesigned city flag on city light poles. Various flags of the Confederacy had previously been flown on city light poles to commemorate the Virginia holiday, Lee-Jackson Day, which is observed on the Friday before Martin Luther King, Jr. Day.[14] About 300 Confederate flag supporters, including members of the Sons of Confederate Veterans, rallied before the City Council meeting,[15] and after the vote the Sons of Confederate Veterans vowed to challenge the new local ordinance in court.[14] Previously, flags such as the Washington and Lee University and Virginia Military Institute flags had also been flown on city light poles but the practice is now discontinued due to the city's ordinance. Through July 2013, attempts to overturn the ordinance have failed.

Previously, a 1993 federal injunction had prohibited Lexington from barring individuals' displaying the Confederate flag.[15] The current ordinance applies only to displays from city light poles; individuals still may exercise their First Amendment rights, including displaying flags of their choice.